In my opinion, you should not hold his funds unless there was monetary loss to you, the casino or the users of the casino. Sure, this guy is a scamster and many accounts of his have been frozen / flagged. The other way i see about dealing with this issue, is if you find out he scammed anyone else during the multitude of HYIP schemes he ran or any other scams he ran, and you find someone who lost money without being warned about the chances of losses. This would be a very long road and frankly, i don't think you would be able to find such people because 2-3 years is a long time and many of those accounts may have closed by now.

So in closing, if he has caused monetary loss to you, the casino or its users, you have a right to recover those costs and pay him back his balance. Hijacking his funds may not be the best approach imo.